Dear sir,
The story about Templeton’s recent bond rating from Moody’s had several factual errors. The story posted this:
“An A1 rating, as opposed to lower ratings, does not require bond insurance, saving the town money. The A1 rating also has a lower interest rate than say an AA rating, or BAA rating.”
In fact, an AA rating is higher than an A1 rating, and an AA would result in lower interest costs than an A1 rating.
The prime reason for the rating is due to the ability to pay these obligations with Prop 2 ½ overrides. It is not due to better money management, rather it is due to the voters approving a Prop 2 ½ debt exclusion.
Also, I refer you to the Moody’s announcement: https://m.moodys.com/research/
An excerpt from that rating: “The A1 rating incorporates a small but growing tax base, vastly improved financial position from just a few years ago, elevated debt burden, and above average pension liabilities.”
Templeton’s finances are under stress because we have, to quote Moody’s Investor Services, “…elevated debt burden, and above average pension liabilities.”
This statement is also incorrect:
“After the audits, making some recommended changes and working to improve its financial state, the town received a perfect bond rating from Moody’s Investor Services for the upcoming bond issue of $12.25 million, which will pay for the new elementary school and work on the police station.”
Templeton was issued a rating of A1. AA and AAA are both above that rating. A2, A3, BAA, BBA etc are below that rating. Within each rating, numerals are added to the fundamental rating to discern between the various ratings. For example, A2 is worse than A1, while AA3 is better than A1 but worse than AA2. So the use of the term “perfect bond rating” is not appropriate in this context, as there are higher bond ratings than Templeton was given.
As you can see, Aa and Aaa are higher than A. A1 is below Aa3 grade.
While the bond rating is good news for Templeton, the Town still faces serious financial issues. This bond rating simply reflects that the debt for the new elementary school and for the new police station are exempt from Prop 2 ½ . You can find that rationale contained within the Moody’s report, which I have linked above.
Sincerely,
Mark Barrieau
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Templeton gets first bond rating since 2012
